11/19/2019 by Ray Wiese 0 Comments
What are the Costs vs Value of Remodeling?
Every year, Remodeling Magazine publishes a Cost vs. Value report and tries to estimate the return on investment to different home projects so consumers will have an idea of what the total investment is. While I am obviously not going to look like an objective source in these matters, I would like to point out a few flaws with the report, as well as provide you with what I know makes our clients glad they renovated.
The primary factual concerns I have with the report are that the cost is averaged out in very different geographic and economic areas. Our higher end projects are typically a bit more expensive, and if you live in a community where custom fixtures are not part of the spec., you get lumped into the “New England” market anyway. I have done $25k bath renovations in Holliston and $150k master baths in Chestnut Hill. I have installed $10k tubs in Holliston, and $500 tubs in Newton…. you get the idea.
Next, the source of the report is a survey of realtors. Nothing against the Real Estate Community; however, about 10 years ago a very distinguished realtor in my area told a prospective buyer her master bath renovation in Wellesley would probably cost $25k. We ended up helping the buyer with the project they wanted for $59k, and needless to say they had to shop around a bit to get to the bottom of the discrepancy. Additionally, the Realtors Association is large, and the average experience delta from new agent to seasoned pro is pretty big.
Here is the other part of the cost/value equation. Imagine you live in a house and the bath is about 60-70 years old and has to be renovated due to “catastrophic delayed maintenance”. You have a few choices:
- Patch the leak and sell low!
- Do a substandard renovation and sell with a bit of guilt, or re-do the bath again in 5 years.
- Repair it properly, enjoy the new space the way you want it.
The other major value changer is in the savings of staying where you are. Homes need maintenance, and eventually renovation. If you like your neighborhood and lot, and you can have a space tailored to your family; you will save the realty commission and the moving expense and get to live where you love. As an added bonus, the longer you stay in your home (I recommend a 5 year minimum) the monetary cost/value delta shrinks. The actual ROI, not the hypothetical return as if you would sell your home the day after completing a renovation, is the appreciation of the real estate at the new home value.
The real danger is for the serial career movers out there. If you change states often for greener job pastures, perhaps buying a new house in each place is a better idea. Happy Remodeling!